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F(2)A17/S19, CTA10/PART14, PART14A and PART14B

Companies have increased flexibility in the way they can use losses sustained from 1 April 2017 (CTM04840).

In addition, the overall amount of relief available for carried-forward losses sustained in any period against profits arising from 1 April 2017 is limited by the loss restriction (CTM05000).

»Ê¹ÚÌåÓýappse changes bring new opportunities for avoidance.

In order to protect the tax system, new legislation has been developed and existing legislation has been extended.

TAAR

»Ê¹ÚÌåÓýapp reform of carried-forward losses includes a targeted anti-avoidance rule (TAAR) designed to counteract tax advantages that might arise from certain avoidance arrangements (F(2)A17/S19) (CTM07900).

Acquisitions

New rules have been introduced to counter loss buying, and existing rules have been modified (CTM06300).

Changes include:

• On a change of ownership, pre-acquisition carried-forward losses cannot be surrendered into the new group for a period of five years (CTA10/PART14/CHAPTER2C, CTM06300).
• »Ê¹ÚÌåÓýapp time limit has been extended for considering whether there has been a major change in a trade or business (CTM06370). Broadly, HMRC can now consider events up to five years from a change in company ownership. (CTA10/S676AA, S673, S677, S690, S692, S704 and S705.)

Loss refresh

CTA10/PART14B (CTM07500) contains provisions that prevent groups from entering into arrangements that turn carried-forward losses into in-year relief.

Prior to 1 April 2017, these rules applied only to trade losses, non-trading loan relationship deficits and management expenses.

From 1 April 2017, the rules have been extended to apply to losses of a UK property business and non-trading losses on intangible fixed assets (CTA10/S730F).